U.K. Unemployment Falls While China Growth Cools: Global Economy

— Britain’s strengthening economy is fueling speculation the Bank of England will be forced to change its forward guidance policy next month as unemployment falls faster than forecast toward the 7 percent threshold that will prompt a policy review. Data on Jan. 22 will show unemployment fell to 7.3 percent in the three months through November, according to the median estimate of economists in a Bloomberg survey. The same day, the BOE will publish minutes of the Monetary Policy Committee’s January meeting, which may show how the labor-market developments are shaping their debate.

— “The jobless rate is likely to hit the MPC’s 7 percent threshold soon,” said Michael Saundersand Ann O’Kelly, economists at Citigroup Inc. in London. “We expect that, at the February meeting or soon after, the MPC will adopt Fed-style language that they do not currently intend to hike rates ‘for some time,’ without defining how long they mean.”

— “A change in the MPC’s forward guidance is coming,” said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. “The question is not if, but when,” he said. “It is not only the faster-than-expected fall in unemployment that the MPC needs to consider. Inflation has also experienced a more acute decline.”

CHINA’S ECONOMY

— China’s industrial-production gains slowed to a five-month low of 9.8 percent and its gross domestic product rose 7.6 percent from a year earlier in the October-December period, based on the median estimates of analysts before data due Jan. 20. The expansion in the world’s second-largest economy will moderate to 7.4 percent this year as investment slows and overcapacity is squeezed, according to a survey last month.

— “We’ve been of the view for quite some time that slowing GDP growth does not imply shrinking demand for bulk commodities,” said Annette Beacher, head of Asia-Pacific research inSingapore at TD Securities. “Slowing Chinese GDP growth from 12 percent a year to 7.5 percent over the last three years or so contrasts nicely with accelerating imports from Australia — primarily iron ore — over the same timeframe.”

U.S. HOUSING

— Sales of previously owned homes eked out a small gain in December to complete the best year since before the last recession, economists forecast a Jan. 23 report to show. The National Association of Realtors estimates 5.1 million existing homes were sold in 2013, the most since 6.48 million properties were purchased in 2006. Higher mortgage rates began to take a toll on the market in the latter part of 2013.

— “Sales were depressed in the fourth quarter in response to a buying frenzy in the third quarter, as potential buyers anticipated higher mortgage rates due to a slowdown in Fed asset purchases,” IHS Global Insight economists Paul Edelstein, Stephanie Karol and Doug Handler wrote in a research report. “But we believe that this was a temporary setback for the housing recovery, and that sales should finally turn up with condo and co-op sales outperforming sales of single-family homes.”

— The revival of the American housing market has ancillary effects on the economy. Rising property values, combined with record stock prices, are driving a “substantial improvement in household wealth and a strong recovery in excess cash positions,” Joe Carson, director of global economic research at AllianceBernstein LP/USA, says in a research report. “We believe these conditions set the stage for consumers to play a bigger role in driving U.S. economic growth this year and beyond.”

AUSTRALIA INFLATION

— Australia’s inflation probably accelerated last quarter, rising 2.4 percent in the final three months of 2013 from a year earlier, close to the middle of the central bank’s target range of between 2 percent and 3 percent, economists projected before a Jan. 22 report. The Australian dollar slid 4.3 percent in the period, the worst performer among 10 major currencies after the yen, boosting the cost of imports.

— “A lower currency helps economic activity. But it also brings some upside price pressures as well,” said Michael Blythe, chief economist at Commonwealth Bank of Australia, the nation’s largest lender. The Reserve Bank of Australia “cites research concluding that a 10 percent drop in the Trade Weighted Index will increase the year-ended inflation rate by a quarter to half a percentage point over each of the following two years.”

BRAZIL INFLATION

— The national statistics agency’s Jan. 23 IPCA-15 report may show that consumer prices in the month through mid-January rose 0.8 percent, the fastest in 12 months, even as the central bank raises interest rates more than any other economy in the world.

— “Inflation in Brazil has remained persistent,” said Fernando Parmagnani, an economist at Rosenberg Consultores Associados. “This can be observed across different product groups. There are pressures from food and beverages, such as fruit, meat and cereals.”— Regulated prices this year will rise almost three times faster than in 2013 as the government allows the cost of goods and services such as electricity and bus fares to rise, said Daniel Weeks, chief economist at Garde Asset Management in Sao Paulo. “We will probably see regulated prices deteriorate headline inflation.”

To contact the reporter on this story: Vince Golle in Washington at vgolle@bloomberg.n

Country Overview: Kuwait Economy

In 1991, the country was the scene of a massive US-led international military campaign to oust Iraqi forces, which had invaded the year before. Operation Desert Storm saw their eventual removal, but Kuwait’s infrastructure was left in bad shape and had to be rebuilt. Oil exports stopped for a time.

_70772838_kuwait_port_gTwelve years later, Kuwait played host to another massive military presence as thousands of soldiers massed on the Iraqi border for the US-led campaign in 2003 to disarm and oust the Iraqi leader Saddam Hussein.

Kuwait was the first Arab country in the Gulf to have an elected parliament. Moves to change the male-dominated political structure culminated in the granting of full political rights to women in 2005.

In May of that year, parliament gave women the right to vote and stand as candidates in elections for the 50-seat National Assembly.

More generally, the growing assertiveness of parliament has led to frequent confrontations with the government, especially after Islamists made major gains at elections in February 2012. The annulment of those elections and subsequent changes to the election law prompted an opposition boycott of fresh polls in December 2012, putting Kuwait’s relatively liberal political credentials in doubt.

Despite large oil revenues, the economy has been badly affected by the global financial crisis. Economic policy-making has been held back by disputes between the ruling royal family and parliament.

source: BBC

Dubai Keen to Become Islamic Economy Capital

Dubai’s proposed Islamic Economy Development Center is expected to advance the emirate’s seven-pillared strategy to establish itself the capital of the Islamic economy within three years.
Sheikh Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE, had issued a law for establishing Dubai Islamic Economy Development Center.
The center, which will be chaired by Mohammed Abdullah Al-Gergawi, the UAE minister of cabinet affairs, is aimed at bolstering Dubai’s bid to become a global hub for Islamic finance, encompassing sectors including sukuk and takaful, as it competes with international rivals such as London and Kuala Lumpur.
The center will be equipped with the financial, administrative and legal tools to promote economic activities compatible with Islamic law in Dubai’s goods and financial services sector, as well as the non-financial sector.
It will conduct research and specialist studies to determine the contribution of Shariah-compliant activities to the gross domestic product, and explore how to extend this contribution to boost the economy.
It will also be responsible for building a comprehensive database of such activities. In addition, the center will also launch Islamic economy awards to boost the sector.
In October, Dubai had launched a plan to be the capital of the Islamic economy in three years, predicated on its establishment as an international center for seven economic pillars — Islamic finance, halal industries, halal tourism, the Islamic digital economy, Islamic art and design, Islamic economic standards and certification, and Islamic information and education.
A recent study by Thomson Reuters gives high hope for the center. The report found that the market has a potential value of $6.7 trillion — bigger than all but two of the world’s national economies — the US and China.
The report estimates Muslim consumers’ global expenditure on the media, food and lifestyle sectors, (including cosmetics and tourism, at $1.62 trillion last year. It puts the figure at $2.47 trillion by 2018.
The report also put the value of Islamic financial assets at $1.35 trillion, which is expected to grow 15 to 20 percent per year in core markets. The report also values the potential universe of Islamic banking assets in core markets under optimal conditions at $4.1 trillion.
“The Islamic Economic Development Center will create new products and lines of services to law firms, which specialize in finance structuring. Firms in the UAE, meanwhile, will benefit from new business because of their understanding of Islamic finance products,” says Eli Hyder, managing partner of Bond Lawyers.

Weekly Review: Last Week’s Top 5 International Business Headlines

Last week has been very active in terms of International Business Relations. Important agreements have been signed, and great economies like China and Russia have faced issues that might require some changes in their economic courses. Here are the Top 5 International Business Trends of previous week from news agencies throughout the Web.

1. EU-US historic trade deal: ‘Putting the corporation above the nation’

The successful adoption of the EU-US trade agreement promises both parties massive gains of up to $159 billion, but the profits could come at the expense of the everyday consumer, who could see the quality of their products diminish as a result. More here.

2. Russia’s woes confirm BRIC slowdown

Russia slashed its long-term growth forecasts this week, providing further evidence of a slowdown in emerging markets. Economy Minister Alexei Ulyukayev said that annual GDP growth would average 2.5% through to 2030, compared with a previous forecast of 4.3%. More here.

3. China meeting likely to chart economic agenda

All eyes are on China as the country prepares for a highly anticipated meeting of the ruling Communist Party. After decades of exponential expansion, the world’s second-largest economy is entering a period of slower growth, and Beijing is under pressure to address issues that threaten further economic development and social stability. More here.

4. Merkel Gets Energy Deal as Self-Imposed Coalition Deadline Nears

German Chancellor Angela Merkel’s bloc and the Social Democrats stitched together an agreement on renewable energy as the parties close in on a self-imposed deadline to draft a coalition accord by the end of the month. More here.

5. India’s Oct trade deficit jumps, but trends seen positive

India’s trade deficit jumped in October, rebounding from a 2-1/2 year low the previous month, as purchases of gold picked up ahead of the festival season, provisional government data showed on Monday. More here.

Weekly Update: Top 5 International Business News Trends

1. U.S. deficit falls to $680 billion. The federal government’s latest annual deficit is the smallest it’s been since 2008, according to Treasury Department data released Wednesday. http://money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/index.html

2. Islamic world slipping behind economically, Pakistan PM warns. Economic and intellectual stagnation has left Islamic nations incapable of punching their weight in the wider world, the prime minister of Pakistan has warned. http://www.telegraph.co.uk/news/worldnews/asia/pakistan/10411814/Islamic-world-slipping-behind-economically-Pakistan-PM-warns.html

3. Is Puerto Rico the next Detroit? Puerto Rico has been called the next Detroit and the next Greece. It’s buried in debt and possibly teetering on the edge of bankruptcy. http://money.cnn.com/2013/10/31/investing/puerto-rico-hedge-funds/index.html

4. US criticizes Germany and China policies.The US has criticized Germany’s economic policies, saying that its export-led growth model is hurting the eurozone and the wider global economy. http://www.bbc.co.uk/news/business-24753267

5. Russia to invest $1.5 bn into new domestic energy projects in Ecuador, making the South American country a key partner in the region, President Vladimir Putin said at a meeting with Ecuadorian President Rafael Correa in Moscow. http://rt.com/business/russia-invest-ecuador%20energy-956/